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Guy Courtin

Management

Visibility Is Key to Digital Transformation in the Supply Chain

Early adopters will have financial advantage over competitors

Published: Tuesday, June 12, 2018 - 11:03

The digital age is well underway, and that accounts for every aspect of business. A 2016 Boston Consulting Group (BCG) survey says that companies that digitally transform their supply chains will be leaders in their industries.

With 10-percent better product availability and 24-percent faster response to changes in demand, those companies can deliver to their customers better, ensuring brand excellence and sales. They also can run their supply chains more efficiently, with higher operating margins, reduced working capital, and fewer cash conversion days. According to BCG, “Leaders will have financial advantage that will be difficult for laggards to overcome.”

Where are you in your transformational journey, and what are the key technologies that can help you digitize your supply chain?

Although an argument can be made for many different technologies, the key enabler to any digital transformation project is supply chain visibility. It is very hard to automate and improve if you cannot “see” across the supply chain, end to end. In a recent digital transformation survey, conducted by Capgemini Consulting and Infor, 94 percent of executives surveyed identified supply chain visibility as a key driver. Visibility can mean many different things, but the true definition is having visibility into everything from planning, production and logistics, to final delivery and payment.

The associated technology to recognize this big-picture vision is the network, which links thousands of partners to a single source-of-truth data model. A strong network strategy is critical to making supply chain visibility work. Without it, most companies are stuck with silos of sight, which makes it hard to truly digitize and transform. Implementing such a network is much easier than during the days of license-and-install software because most technology today is cloud-based. In some cases, technology can be turned on instantly, for solutions that do not require external data sources to function. Cloud-based transportation and warehouse management solutions, for example, have become very mature and, depending on the scope of the initiative, can be easy to implement. However, companies should not underestimate the complexity that comes with any supply chain, particularly those that are global.

As you think about which technologies could offer you the best return on your investment, you will find that there are impressive ROI stories across all technologies. However, it is clear that, in talking with business leaders, many enterprises have yet to fully recognize the value potential of end-to-end visibility. This is partly because so few companies have fully implemented it.

When they do deploy a network that gives them full, end-to-end visibility, we have seen examples where this drove a nine-figure ROI by reducing inventory buffer stock, lowering logistics costs, and enabling companies to respond smartly to unplanned disruptions. Ultimately, visibility enables them to better serve their customers, and the ROI of customer satisfaction is hard to beat. You can approach the digitization of your supply chain in a step-by-step fashion, with the first step being to light up your network with a visibility solution. From there, you will be able to see the weak spots and where to focus your digitization efforts.

The effort to connect and digitize a global supply chain should not be underestimated. It is important to treat any digitization effort with the same discipline that you would use for any major IT initiative, including strong project and change management.

As noted earlier, there are multiple capabilities available in the market to help put you on the path to digitization. The solutions that have seen the most adoption, over time, include supply chain visibility, transportation management, warehouse management, supply chain planning, order management, procure to pay, procurement, supply chain finance, and an array of business intelligence solutions.

And the good news is that there are more digitization technologies on the horizon. Capabilities built around small, web-enabled devices (IoT), mobile apps, and machine learning are becoming mature and show great promise. There is also a lot of hype around the potential of blockchain in the supply chain. Blockchain shows great promise because it could offer a low-cost, secure technology on which enterprises can run and authenticate their global supply chains. But, we are still several years off from seeing mass adoption. In the meantime, a robust visibility system can protect and enable you to digitize your entire supply chain. After all, as delivery expectations rise, it is hard to be efficient and agile if you cannot “see.”

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About The Author

Guy Courtin’s picture

Guy Courtin

Guy Courtin is vice president of industry and solution strategy at Infor.